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A top Federal Reserve policymaker assured that the U.S. central bank will act against inflation even as the economy threatens to fall into recession. "We have to be the barrier" to high inflation, said Janet Yellen, president of the San Francisco Federal Reserve Bank. Her comments signal the Fed may stop cutting interest rates for the time being.

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Janet Yellen, head of the Federal Reserve, said she believes the central bank should start raising interest rates this year, with subsequent increases implemented gradually. "But I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step," she said.

Two Federal Reserve governors said the U.S. economy faces no serious threat from inflation and that it isn't time to tighten monetary policy. Janet Yellen, the central bank's vice chairwoman, said surging commodity prices are temporary and won't have a prolonged effect. William Dudley, president of the Federal Reserve Bank of New York, said he isn't enthusiastic about tightening because the labor market is expected to have "excess slack" through the end of 2012.

Janet Yellen, president of the Federal Reserve Bank of San Francisco, said the Fed must not boost interest rates too quickly on concerns about inflation, or it will risk pushing the economy back into recession. "I do not believe that there is a real threat of high inflation in the current situation," Yellen said. "If anything, I'm more concerned that we will be tempted to tighten policy too soon, thereby aborting recovery."

Janet Yellen, president of the Federal Reserve Bank of San Francisco, said the Fed must not boost interest rates too quickly on concerns about inflation, or it will risk pushing the economy back into recession. "I do not believe that there is a real threat of high inflation in the current situation," Yellen said. "If anything, I'm more concerned that we will be tempted to tighten policy too soon, thereby aborting recovery."